Following Hertz’s recent struggles with electric vehicles (EVs), CEO Stephen Scherr has announced his resignation, according to a report by Bloomberg. This move comes following Hertz’s ambitious plan to transform its car rental business by purchasing 100,000 Tesla EVs, which initially caused Tesla’s value to skyrocket to a staggering $1 trillion valuation.
Scherr joined Hertz following the decision to invest in EVs was made. Under his leadership, Hertz expanded its EV fleet by also placing orders with Polestar and GM. However, things took a downturn for the company when Tesla significantly reduced the prices of its Model 3 and Model Y EVs, leading to a decline in resale values. Additionally, Hertz faced challenges with expensive repairs and a lukewarm response from renters regarding Tesla’s vehicles.
As a result, Hertz decided to sell off 20,000 EVs, amounting to one-third of its electrified fleet. This move incurred a hefty $245 million charge for the company, marking its largest quarterly loss since the pandemic. Notably, other rental car firms, such as Germany’s Sixt, have also decided to phase out their entire EV fleets.
In a surprising twist, Hertz’s new CEO will be Gil West, the former COO of GM’s robotaxi Cruise division, who will also join the board of directors. However, West’s appointment raises questions following his dismissal alongside eight other Cruise executives following an incident in which a pedestrian was dragged by a Cruise vehicle. Authorities accused the company of withholding a crucial video that allegedly showed the victim underneath the vehicle.
These recent developments in the car rental industry point to a couple of potential future trends. Firstly, the challenges faced by Hertz with its EV fleet highlight the importance of carefully considering the market dynamics and potential risks before making significant investments. The fluctuating prices of EVs and the concerns surrounding their repair costs need to be taken into account by rental car companies.
Furthermore, the decisions made by Hertz and other rental car firms to scale back their EV fleets might be indicative of an imminent shift in the industry. While EVs were once seen as the future of mobility, it is possible that the rental car market is not yet ready for such a widespread adoption of electric vehicles. The limited infrastructure, expensive repairs, and lower customer demand for EV rentals are factors that need to be addressed and resolved for EVs to become a viable option for rental car companies.
Looking ahead, the industry should focus on finding a balance between offering sustainable and environmentally friendly transportation options while still meeting the demands and preferences of customers. It is crucial for rental car companies to conduct thorough market research, considering factors such as pricing, customer preferences, and infrastructure readiness before committing to large-scale EV fleet investments.
In conclusion, Hertz’s CEO stepping down, along with the company’s decision to scale back its EV fleet, demonstrate the challenges faced by rental car companies in the EV space. These developments serve as a reminder that careful analysis of market dynamics and understanding customer demands is crucial before making substantial investments. As the industry moves forward, finding the right balance between sustainability and customer preferences will be key to driving future growth and success in the rental car market.
